FDD Talk 2021: Retro Fitness Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Retro Fitness franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Retro Fitness franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Retro Fitness franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Retro Fitness outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Retro Fitness’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2019 average gross sales, revenue per square foot, and number of members for the 121 Retro Fitness franchised outlets that were open to the public for the entire period commencing on January 1, 2019 and ending on December 31, 2019

• 2020 average gross sales, revenue per square foot, and number of members for the 104 Retro Fitness franchised outlets that were open to the public an average of 30 out of 52 weeks in 2020 due to COVID-19

Section I – Background Information

19 Things You Need to Know About the Retro Fitness Franchise

Appoints Former Planet Fitness Executive as Chief Development Officer

1.  In early March 2021, Retro Fitness announced the appointment of Mark Andrews as its new chief development officer. Andrews brings more than 15 years of franchise development expertise to Retro Fitness’ executive leadership team spearheaded by former Starbucks executive, CEO Andrew Alfano. The growth of the brand’s C-Suite is the final step in Retro Fitness’ leadership transformation, positioning the brand for rapid growth and advancement.

2.  Prior to joining Retro Fitness, Andrews helped lead all franchise sales and development for Planet Fitness. There he was instrumental in attracting and selecting investor groups to help fuel their growth, specifically within area development and territory expansion. He worked cross functionally with other executives to help grow that brand into what it is today.

3.  Andrew Alfano, CEO of Retro Fitness, said, “We’re thrilled to add Mark Andrews to the executive leadership team. With more investors and small business owners turning to Retro Fitness for franchise and investment opportunities, Andrews’ expertise in Area Development and Territories is a great compliment to our growth strategy and vision for the future of Retro Fitness.”

4.  Alfano continued, “The 30 Billion Dollar Fitness Industry was forecasted to grow 20% over the next 5 years, and that was before a global pandemic shined a light on obesity and the many unhealthy behaviors people adopted. It was critical that I prioritized building a team able to capitalize on an industry that is about to explode and be more relevant than ever. It starts with your people and I am proud of the talent we have attracted to the organization.”

5.  Mark Andrews rounds out Retro Fitness’ talent laden executive team alongside COO Todd Scartozzi, former COO of Gold’s Gym; CMO Victor Bao, former marketing executive with Harley-Davidson and Louis Vuitton; as well as CFO Robbie Sprechman, industry insider and longtime Retro Fitness executive.

6.  As chief development officer of Retro Fitness, Mark Andrews will lead all area and territory development along with investor opportunities, which include all franchise sales. This includes real estate as well, with a strong focus on brand as Retro Fitness scales across the country with immediate focus on the emerging markets of Southeast Florida, Houston, Dallas, the Midwest and Mid-Atlantic markets.

Launches At-Home Workout Bike and First-Ever Dual Gym Membership

7.  In early April 2021, Retro Fitness announced the launch of Get Wheel, an at-home stationary bike with an in-gym dual membership. This marks the brand’s entry into the at-home fitness arena, and the first national gym to offer a membership that combines both at-home and in-gym fitness experiences.

8.  Following the demand for at-home fitness during the pandemic, Retro Fitness created Get Wheel as an answer to the need for a flexible membership, offering even more ways to get healthy, stay fit, and continue your fitness journey. Consumers nationwide can purchase a Retro Cobra bike and gain access to any Retro Fitness location, helping them achieve their fitness goals virtually and/or in-person. Get Wheel is making fitness fun, interactive, and versatile.

9.  The Get Wheel program is $64 a month for new members and includes:

• Ultimate Gym Membership to any Retro Fitness location;
• Access to the Retro Fitness Cobra stationary bike;
• Unlimited access to cycling classes led by Retro Fitness personal trainers;
• Virtual programs;
• Payment options available from Klarna, a leading global retail bank, payments, and shopping service.

10.  Andrew Alfano, CEO of Retro Fitness, said, “As Retro Fitness continues its journey of rapid growth and advancement in its 15th anniversary year, we felt the need to do our part in creating a healthier America, and continuing our efforts as an extension of healthcare. Our brand footprint already extends beyond the four walls of our clubs by including healthy cooking segments, mental health support and focus, at-home fitness, and more, to promote a healthier lifestyle. With the launch of Get Wheel, we’re now leveraging the freedom and flexibility of our offerings to provide a low cost, world-class experience whether you’re in-person at our health club, or tuning in digitally from around the country.”

Launches Join Now Media Agency

11.  At the end of August 2021, Retro Fitness announced the launch of Join Now Media – Where Leads Become Joins, an in-house marketing agency created to support franchisees in their marketing efforts across America. The agency was created to reduce costs coming out of the pandemic, and empower franchisees with in-depth knowledge of marketing, analytics, and results. Retro Fitness is committed to providing franchisees with world-class tools and solutions.

12.  Now with Join Now Media, Retro Fitness provides intelligent resources to bring the franchise business owner a better understanding of the psychographics, loyal members’ analysis, as well as optimization information and data on leads and joins including acquisition costs based on locations and demographics.

13.  In 2020, Retro Fitness decided to bring all marketing efforts in-house as it stewarded the brand and its franchisees through the pandemic. Keeping close watch on the fitness industry through historical data and results, along with monitoring consumer behavioral patterns, the fitness franchise had a greater understanding of its members, their needs and lifestyles which today has produced a tremendous uptick in per club new member joins.

14.  Victor Bao, chief marketing officer of Retro Fitness, said, “Data, knowledge, and strong business analytics in the hands of franchisees and the franchisee Support Center will help the brand produce world-class results along with optimal franchisee revenue and profitability. In partnership with each of our franchise owners, together we now have a clearer understanding of their local needs, local member demographics, acquisition costs, and we are here to provide support as we lead them to success and continued revenue growth year-over-year. For many new clubs, this has been a great opportunity for them to focus on the in-club member experience.”

15.  Today the agency handles all digital marketing across search engines and social media channels for 50% of the franchise system with optimal results. Join Now Media offers:

• CTV & OTT placement;
• Paid media through Facebook, Instagram, YouTube, LinkedIn, Twitter, and Tik Tok;
• Nielsen psychographics analysis by club;
• Branding and individual club page design with enhanced Search Engine Optimization;
• Help drive profitable growth through offers and high-value amenities promotions;
• Full media management and reporting;
• Development of in-house scheduling tools through the agency’s India Development Team;
• Qualified lead generation with a focus on reducing cost while generating quality acquisitions;
• Additional television commercial distribution through Open and Private Market Places.

Company History

16.  Retro Fitness was founded in 2004 by Eric Casaburi in Colts Neck, New Jersey. Casaburi had already spent years as a gym owner. Back in 1997, Casaburi purchased local New Jersey gyms in Brick and Stafford. He later converted these gyms into Retro Fitness.

17.  The model Casaburi based the Retro Fitness concept off was high-quality equipment at a low price, $19.99 a month, that created nostalgia for the past. The concept was popular and Casaburi began franchising Retro Fitness in 2006. The low cost business model and gym member model helped Retro Fitness stay afloat during the 2008 economic recession.

18.  Over the next decade, Retro Fitness grew around the United States. By 2018, there were over 150 locations in operation. The following year, Casaburi stepped down as CEO and was replaced by Andrew Alfano.

Entrepreneur’s Franchise 500

19.  Retro Fitness did not rank on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Retro Fitness franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Retro Fitness’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  145
• Outlets at the End of the Year:  147
• Net Change:  +2

2019

• Outlets at the Start of the Year:  147
• Outlets at the End of the Year:  137
• Net Change:  -10

2020

• Outlets at the Start of the Year:  137
• Outlets at the End of the Year:  105
• Net Change:  -32

Company-Owned

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• As of April 26, 2021, there were 104 active franchised Retro Fitness Outlets (each, a “Franchised Outlet”). Of those 104 Franchised Outlets, 104 were open to the public an average of 30 out of 52 weeks due to COVID-19. All had varying limited occupancy levels, with some as low as 10%. All 104 of these Franchised Outlets were included in the results displayed in Tables A, B, and C below (the “ABC Outlets”).

• As of April 22, 2020, there were 130 active franchised Retro Fitness Outlets (each, a “Franchised Outlet”). Of those 130 Franchised Outlets, 121 were open to the public for the entire period commencing on January 1, 2019 and ending on December 31, 2019. All 121 of these Franchised Outlets were included in the results displayed in Tables A, B, and C below (the “ABC Outlets”).

Table A – Average Gross Sales of ABC Outlets Reported to ABC Financial from March 1, 2019 to February 29, 2020, and from March 1, 2020 to February 28, 2021

Top 10%